The European Central Bank (ECB) is urging EU lawmakers to scrap the bank deposit reserve requirement for stablecoin issuers under the Markets in Crypto-Assets (MiCA) regulation, citing risks to financial stability. The European System of Central Banks (ESCB) argues the current rule, which mandates holding up to 60% of reserves in bank deposits, could destabilize smaller lenders during a run. The ESCB proposes replacing it with a maturity-based liquidity model suggested by the European Banking Authority, favoring short-term sovereign bonds and reverse repos to prevent systemic shocks.
The European Central Bank is pushing for a major change to the MiCA stablecoin framework, calling for the removal of the rule that requires issuers to hold a significant portion of their reserves in bank deposits. On September 22, 2026, the European System of Central Banks submitted its response to the European Commission, arguing that the current deposit requirement poses a systemic risk to the banking sector.
The ESCB, which includes the ECB and the 27 national central banks of the European Union, stated that the rule forcing stablecoin issuers to keep 30% of reserves in bank deposits—and 60% for significant stablecoins—should be eliminated. The concern stems from the fact that while these funds are liquid assets for the issuer, they represent liabilities for banks that must be repaid on demand.
Analysis of Liquidity Coverage Ratio data shows that deposits from electronic money institutions have a 100% outflow rate, while general public deposits are only 5%. During a stablecoin run, issuers withdrawing funds instantly could deplete liquidity, a risk concentrated in smaller banks competing for these deposits. The European Systemic Risk Board highlighted that a stablecoin issuer with €10 billion in reserves would need €6 billion in bank deposits, and a 20% withdrawal request would negatively impact the banks.
Instead of the deposit rule, the ESCB supports the European Banking Authority’s maturity-based proposal for Article 36(4). This alternative requires significant stablecoins to hold 40% of funds maturing within one day and 60% within five days, using assets like overnight reverse repos and short-term sovereign bonds that do not create liabilities for banks.
The change could align EU regulation with the U.S. GENIUS Act, benefiting compliant issuers and removing unstable deposits from bank balance sheets. The Commission’s consultation ends September 30, 2026, with final standards potentially drafted in early 2027 and an 18-month migration period. The outcome will determine if Europe becomes a major hub for regulated stablecoin issuance or remains constrained by rules deemed systemic by central banks.
